Reference no: EM132482067

Schedules of Cost of Goods Manufactured and Cost of Goods Sold;

Income Statement

Nish Corporation has provided the following data for the month of April:

Sales............................................... $220,000
Raw materials purchases ............... $50,000
Direct labor cost ............................ $23,000
Manufacturing overhead cost ........ $59,000
Selling expense.............................. $18,000
Administrative expense ................. $43,000

Inventories: Beginning Ending

Raw materials........ $26,000 $35,000
Work in process..... $18,000 $22,000
Finished goods....... $42,000 $29,000

Required:

Question a. Prepare a Schedule of Cost of Goods Manufactured in good form for April.

Question b. Prepare an Income Statement in good form for April.

Part B: Application of Job Order Costing

Scanlon Company has a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate for the most recent year:

Machine-hours............................... 95,000
Manufacturing overhead cost ........ $1,710,000

During the most recent year, a severe recession in the company's industry caused a buildup of inventory in the company's warehouses. The company's cost records revealed the following actual cost and operating data for the year:

Machine-hours............................................................................. 75,000
Manufacturing overhead cost ...................................................... $1,687,500
Amount of applied overhead in inventories at year-end:
Work in process........................................................................ $337,500
Finished goods.......................................................................... $253,125
Amount of applied overhead in cost of goods sold.................. $759,375

Required:

Question a. Compute the company's predetermined overhead rate for the year and the amount of underapplied or overapplied overhead for the year.

Question b. Determine the difference between net operating income for the year if the underapplied or overapplied overhead is allocated to the appropriate accounts rather than closed directly to Cost of Goods Sold.